Correlation Between Soken Chemical and PT Bank

Can any of the company-specific risk be diversified away by investing in both Soken Chemical and PT Bank at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Soken Chemical and PT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Soken Chemical Engineering and PT Bank Maybank, you can compare the effects of market volatilities on Soken Chemical and PT Bank and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Soken Chemical with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Soken Chemical and PT Bank.

Diversification Opportunities for Soken Chemical and PT Bank

0.31

Correlation Coefficient

Soken Chemical  PT Bank

Weak diversification

The 3 months correlation between Soken and BOZA is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Soken Chemical Engineering and PT Bank Maybank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Maybank and Soken Chemical is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Soken Chemical Engineering are associated (or correlated) with PT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bank Maybank has no effect on the direction of Soken Chemical i.e., Soken Chemical and PT Bank go up and down completely randomly.

Pair Corralation between Soken Chemical and PT Bank

Assuming the 90 days trading horizon Soken Chemical Engineering is expected to under-perform the PT Bank. In addition to that, Soken Chemical is 1.69 times more volatile than PT Bank Maybank. It trades about -0.13 of its total potential returns per unit of risk. PT Bank Maybank is currently generating about -0.02 per unit of volatility. If you would invest  1.10  in PT Bank Maybank on December 28, 2024 and sell it today you would lose (0.10) from holding PT Bank Maybank or give up 9.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Soken Chemical Engineering  vs.  PT Bank Maybank

Soken Chemical Engin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Soken Chemical Engineering has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

PT Bank Maybank

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Bank Maybank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PT Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Soken Chemical and PT Bank

The main advantage of trading using opposite Soken Chemical and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Soken Chemical position performs unexpectedly, PT Bank can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in PT Bank will offset losses from the drop in PT Bank's long position.

The idea behind Soken Chemical Engineering and PT Bank Maybank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the CEOs Directory module to screen CEOs from public companies around the world.